Lawyers with the Yukon government and the territory's First Nations appeared before the Yukon Court of Appeal this week, in a controversial government land lease case that has turned into a court fight over how land-claim agreements should be interpreted.

The territorial government is appealing a May 2007 Yukon Supreme Court ruling that overturned a 65-hectare land lease that the government had granted to a prospective farmer.

The lease was for land north of Carmacks, within the Little Salmon Carmacks First Nation's traditional territory. In quashing the lease, Justice Ron Veale ruled that the government did not properly consult with the First Nation or with area trapper Johnny Sam, who said he would be affected by the deal.

Lawyers for the territorial government, the federal government, the Little Salmon Carmacks First Nation, the Kwanlin Dun First Nation in Whitehorse and the Council of Yukon First Nations all made submissions before the Yukon Court of Appeal Monday and Tuesday.

In the Yukon Supreme Court decision, Veale noted a Supreme Court of Canada ruling that says that the government has a duty to consult with First Nations in matters such as land sales.

But government lawyers argued that that duty to consult First Nations does not override the detailed agreement negotiated in their final land-claims agreement.

Siding with First Nations on the matter effectively gives them a veto over land developments, the lawyers argued.

But Joseph Arvey, the lawyer for the Kwanlin Dun First Nation, insisted that First Nations are not asking for such a veto.

At the same time, he argued that aboriginal land claim agreements would suffer if the territorial government wins their appeal.

"It would seriously undermine their treaty rights to harvest wildlife and fish on Crown land, and we say that shouldn't be allowed," Arvey said outside court Tuesday.

Aboriginal-rights lawyer Arthur Pape said the Yukon government's position is dishonourable, adding that if the government wins its fight over a 65-hectare parcel of land, imagine how it would act if a major development is at stake.

"That's not what the Supreme Court of Canada says governments are allowed to do when they're dealing with aboriginal people," Pape said.

"If they think they have a right to govern in a dishonorable way, then they're dangerous."

Justices with the Court of Appeal say they will take some time before ruling on the case.

Whichever way the court decides, lawyers involved on both sides suggest that it will likely be taken to the Supreme Court of Canada for a final decision.